Dynamic receives an unexpected bill in the third quarter from the Internal Revenue Service for...

1. Which items in would be affected by the following events?

a. There is a rise in interest rates.

b. Suppliers demand interest for late payment.

c. Dynamic receives an unexpected bill in the third quarter from the Internal Revenue Service for underpayment of taxes in previous years.

2. Shows Dynamic Mattress’s year-end 2007 balance sheet, and Shows its income statement for 2008. Work out the statement of cash flows for 2008. Group these items into sources of cash and uses of cash.